Non-reimbursable expenses: What they are, types, and how to manage them

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Even with an expense policy in place, you know it can be a headache to manage your company’s expense reports. How do you decide which expenses will be covered and which won’t? It’s important to get this right to keep your budget balanced—and to avoid surprises during an audit. With a clear policy, you'll have fewer questions from your team, hopefully saving everyone time and energy. 

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In this article, we explain what non-reimbursable expenses are, common examples, and how to manage them, making your job a whole lot easier.

What are non-reimbursable expenses?

Non-reimbursable expenses are costs for services or items that you won’t reimburse through your employees’s per diem or expense report. Non-reimbursable expenses might include things like personal entertainment, childcare, parking tickets, or travel upgrades.

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These expenses aren’t directly linked to your business purposes. And, they fall outside your stated guidelines or policies. 

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Understanding the difference between reimbursable vs. non-reimbursable expenses helps you manage your company finances effectively, aligns expenses with your policies, and more easily resolves (or avoids) disputes.

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So what are some common non-reimbursable expenses to be aware of?

Examples of non-reimbursable expenses

Business expenses can quickly add up, especially when your team is traveling for a conference, event, or sales meeting. But only business-related travel costs, meals and entertainment, and personal needs should be submitted on an expense report. (Be sure to review your company’s policy on incidental expenses for a more complete list.)

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Some examples of potential non-reimbursable expenses include:

Travel expenses‍

• Airline upgrades to business or first class without approval
• Optional travel insurance
• Hotel room amenities like in-room movies, minibar drinks or snacks, or other services
• Rental car upgrades or costs related to personal travel
• Parking or traffic violations
• Costs related to your personal vehicle or personal property
• Airfare or hotels costs for spouses or family members‍

Meal and entertainment expenses‍

• Alcohol, although there are exceptions
• Meals that aren’t part of a business meeting or event, taken for personal convenience
• Meals or entertainment for spouses or family members
• Personal entertainment, side trips, or sporting events unrelated to the business trip

Personal expenses‍

• Childcare, babysitting, or daycare during business trips or work hours
• Clothing or luggage costs
• Non-essential electronic accessories like headphones, smartwatches, or other gadgets
• Health club or gym costs
• Personal services like dry cleaning, nail salons, or haircuts, even if during business travel
• Pet care

Other non-reimbursable costs

• Expenses purchased with reward points (mileage, credit card rewards, gift cards, etc.)
• Late fees on credit cards
• Gifts
• Continuing education credit tuition or fees
• Professional license or certification fees
• Political or charitable contributions, regardless of the cause

Managing non-reimbursable expense policies

Effective expense management starts with a clear policy. Your company's travel and expense policy should outline which expenses qualify for reimbursement and which don’t. The section on non-reimbursable expenses should include specific categories and examples, making it easier for your team to know what is acceptable and what is off-limits to claim. 

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If there are expenses that fall within a gray area, always seek guidance from the finance or HR teams for clarity. 

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Hopefully asking questions in advance will help your team understand not to submit non-reimbursable expenses, saving time when it comes time to review later. If you’re having trouble understanding the distinction, ask the question: does this expense benefit the employee personally or does it benefit the company? And for employees, it’s best to use common sense and good judgment when evaluating expenses. 

How can Ramp help with non-reimbursable expenses?

Tracking non-reimbursable expenses manually is a challenge. But Ramp’s expense management software flags potential non-reimbursable items, making it easier for you to maintain compliance and avoid mistakes. And with our corporate cards, you can automatically set category limits to ensure every purchase stays within your policies.

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‍Ramp offers a solution to simplify the entire process with customizable expense policies, real-time expense tracking, streamlined approval workflows, and detailed reporting, so you can ensure compliance and optimize your financial operations.